Reconciliations

UTI Connect

Connecting counterparties to pair and exchange UTIs on one platform
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Global UTI Enrichment

After the successful launch of UTI Connect, our pre-submission UTI enrichment and sharing tool for the Securities Financing Transactions Regulation (SFTR), we are bringing this powerful engine to EMIR and other dual sided reporting jurisdictions that are requiring matching of UTIs. Connecting UTI generators and receivers, UTI Connect will help you reduce your UTI pairing breaks and make it easier for reporting firms to correct and replace incorrect UTI details.

Reporting bilateral OTC trades is a very manual process and often entails the typing of UTIs into a reporting system before they can be submitted to a trade repository. Whilst the volume of transactions is lower than cleared and electronically confirmed activity, this process is manual and requires significant resources and oversight to ensure trades are reported with the correct UTI in a timely manner.

Aside from the critical nature of exchanging UTIs in dual-sided reporting regimes, the path to achieving a harmonized global UTI across all entities with reporting obligations in their respective jurisdictions is a real challenge. This is where UTI Connect can be particularly effective in helping to solve this problem. It can benefit both large sell-side banks with multi-jurisdictional obligations and many counterparties as well as buy-side firms who wish to retrieve their UTIs in a timely and standardized way.

With EMIR REFIT go-live set for April 29th 2024, ESMA has introduced a deadline of 10:00am UTC T+1 to share UTIs. Market participants will need to re-evaluate their current target operating models to support this new requirement. Having a centralized utility that allows counterparties to come together to agree, share and pair their UTI will help address some of these operational problems that firms are facing.

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Benefits

Marketplace approach to standardize sharing and distribution of UTIs
Configuration portal to manage receiver/generator status of UTI per counterparty LEI
Matching of trade economics with counterparties to automatically enrich UTI
Dashboard analytics to review allege trades, matches and breaks
Global structure to support UTI waterfall approach of counterparty with earliest reporting obligation
Read-only dashboard available for distribution of UTIs to non-member firms
Access to Cappitech working groups, professional services and regulatory reporting experts

How Our Solution Works

1
Connect
Connect your trade economics via file upload or API
2
Configure
Set generator/ receiver status or waterfall approach
3
Match
Solution processes transaction details to match trades and enrich UTI
4
Distribute
Enriched UTIs and statistics made available in the portal, sFTP or API

What is Dual Sided Reporting?

Derivative reporting regulations are split between single and dual sided reporting regimes. With single sided reporting, only one counterparty of the trade is responsible to submit to a Trade Repository it’s side of the trade. This is the case in the US under CFTC Part 43 and 45 reporting. This regulation uses a hierarchy approach to determine who should be the reporting party and takes into consideration whether one side is a Swap Dealer or Financial Counterparty.

Under dual sided reporting, the regulation both counterparties of a trade to submit their side of the trade. The benefit of this format is that it allows regulators to easily view margin and exposure levels of each reporting entity on their own aggregated level. It also allows regulators to view for inconsistencies between how different counterparties are reporting their side of the transactions.

 

How UTIs come in to play

In order to compare transactions between counterparties, firms enter a Unique Trade Identification (UTI) code. The UTI is an alphanumeric code that is to be unique for that trade. In EMIR and other jurisdictions, both counterparties are required to enter the same UTI. This information is then used by ESMA and NCAs to match report details between each side of the trade.

One of the biggest challenges of dual-side reporting regimes that require both counterparties to use the same UTI is the creation and distribution of this unique value. Often there will be an agreement between firms that one side is the generator. However, that counterparty may not always share the UTI in time with the receiver for them to report within the T+1 requirements. This could lead to trade breaks where two firms are reporting the same trade with a different UTI.

Learn how to easily pair and exchange UTIs

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